Question

Established expense it's time ratio or sales ratio or pre or post incorporation

Answer 1

Time ratio:

Pre-incorporation period (1.4.20X1 to 1.8.20X1) = 4 monthsPost incorporation period (1.8.20X1 to 31.3.20X2) = 8 monthsTime ratio = 4 : 8 or 1 : 2

Sales ratio:

Average monthly sale before incorporation was twice the average sale per month of the post incorporation period. If weightage for each post-incorporation month is x, thenWeighted sales ratio = 4 × 2x : 8 × 1x = 8x : 8x or 1 : 1

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